The Foreign Economic Relations Economics Essay

Foreign economic dealingss among the states play a really of import function in universe economic development and if the relationship between these states is turning up states must turn up. Russia is non an skip. Russian foreign trade has a thousand twelvemonth old record which is doing positive milieus all over the universe. The exact form of foreign trade activities in Russia was made after 1860s and merchandise policies at that clip include custom responsibilities for illustration assorted usage charges were replaced by one unvarying rate of 15 % . Current trade policy of Russia is to hold rigorous protectionism and province monopoly on foreign trade. ( Malashevskaya, 2005 )

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Export Policies

In the first half of 20th century, Russia started exporting grain which covers 30 % of universe exports and after that takes a leap in exporting wood, flax, sugar, oil and manganese ore with other resources. Currently Russia has trade with 31 states among the Earth but still the major trading spouse is Germany ( Bureau of Europe and Eurasian personal businesss, 2009 ) . In 2002 foreign export policies of Russia are based on overly broad rules of free market but in twelvemonth 2008 domestic production in Russia started to turn at a higher rate which gave birth to a new foreign trade policy. This new policy was purely in the favour of beef uping of national currency by exporting more and more goods to different states in the universe. ( Makeeva & A ; Chaplygina, 2008 ) In the current export policy of Russia a imposts control system mostly based on the same rules accepted in GATT which includes the process of declaration, permission of goods, imposts every bit good as the same usage values based on existent values of similar foreign contracts. ( Makeeva & A ; Chaplygina, 2008 ) . Current export turnover of Russia is USD 206575,5 million ( Russian national trade point, 2009 ) . Major exportable points of the Russia are rough oil, fabrication and Natural gas and chief exports spouses are Germany, Netherlands, Italy and China. ( Russia Export, 2009 )

Import Policies

As the exports was increasing quickly, imports besides started turning from late 1990s.the chief ground for this growing was the unmanageable escape of liberalisation in foreign trade and the gap of the antecedently closed Russian market. In the 2000 ‘s, imports lagged behind exports in footings of kineticss but still continued to turn, which should be attributed to both disposable incomes growing and the strengthening of the rouble. ( Makeeva & A ; Chaplygina, 2008 ) .

In future Russian federation are anticipating a ruin in exports because of changeless and decline oil monetary values while imports are predicted to maintain turning because of Central Bank ‘s consistent pecuniary policy. Currently Russia ‘s importation turnover is USD 114833,1 million ( Russian national trade point, 2009 ) . Major importable points of Russia are capital goods, nutrient, fuel and energy. Major import spouses are Japan, China, Ukraine and Germany. ( Russia Import, 2009 )

Foreign Direct Investment

Russia is a immense state stretching across Europe and Asia, possessing its wealth in the signifier of vulnerable natural resources, engineering and about 150 million consumers with a big skilled work force. Harmonizing to recent FDI policy their chief purpose is to travel toward a new market construction based on private capital investing to incorporate fleetly into the universe economic system ( Blyakha, 2009 ) . By early 2007 about 897,000 new concerns have been created, and 69 per centum of Russia ‘s private concern is converted into little and average sized concern. Presently the major trading spouses for FDI in Russia are Ukrainian ( Eastern Europe ) , U.S, Germany, Finland and major trade sectors for trade are nutrient & A ; imbibe, automotive, and fiscal services. ( James, Uri, Zeljko, 2009 )

Major Trading Spouses

Major export merchandising spouses of Russian federation are European Union ( 58.7 ) , China ( 5.2 ) , Ukraine ( 5.0 ) , Turkey ( 4.7 ) , Belarus ( 4.3 ) and major import spouses are European Union ( 44.6 ) , China ( 9.4 ) , Ukraine ( 6.7 ) , Japan ( 5.7 ) , and Belarus ( 5.0 ) . European Union is anA political brotherhood of 27A member provinces including Germany, France and U.K. Total export from EU to Russia 2009 isA a‚¬105 billion and entire goods imports from Russia to EU in 2009 is a‚¬173,2 billion. Among the all 27 EU Member, Germany was the largest exporter to Russia in 2008, with 23.1 billion euro or 34 % of the sum.

Major Trading Items

In 2008 Almost half of Russia ‘s import was machinery and vehicles, while energy screens two tierces of its exports. At the elaborate degree, the chief import points for Russia is medicine, wireless & A ; telephone transmittal equipment, motor autos, and computing machines parts, while the chief imports today are oil coal, gas, aluminium, Ni and Cu. Other so this, major portion of exporting points in 2009 consists of vodka and petroleum crude oil and presently the maximal import is of Machinery, Chemical merchandises, gum elastic, equipment and conveyance ( Russian national trade point, 2009 )

FDI from U.S to Russia

As of today Russian is by far the most of import and calculated trade spouses of the United States. The portion of Russia in the entire sum foreign trade is over 20 % in U.S. among all Russia ‘s largest trading spouses U.S is at the 5th place after Germany, China, Italy and Netherlands, and after this Ukraine is besides one of the most important spouses in the CIS. ( Cooper, 2010 ) .The American Chamber of Commerce is the largest foreign concern organisation runing in Russia. It was founded in 1994. It advocates the trade and investing with more than 800 members, which include major U.S. Corporations. Some of the major corporations that have FDI in Russia are FORD, Coca-Cola, Cargill, Procter & A ; Gamble and many more. ( Russian national trade point, 2009 ) . As it is non possible to discourse every American company I m discoursing two major companies, The FORD motor Company and Cargill.

TheA Ford Motor CompanyA is an AmericanA transnational corporationA with central offices in Michigan, United States. Ford covers about 32 % of Russian market and late they have launched a new theoretical account of Ford Escape with three new characteristics extra from the standard SUV in Russia. Ford opened its first Assembly works in 2002 with 387,360 square foot country and presently 2,000 people are working at that place. The works has a capacity to bring forth 120,000 vehicles every twelvemonth, of which 20,000 are Ford Mondeo and 100,000 are Ford Focus. ( Johnson, Strumpf, 2009 ) .

Cargill is aA in private transnational corporation started in 1985, with there head office in province ofA MinnesotaA in United States. As I have told you earlier that Russia is importing many agribusiness points and this company is an agribusiness industrial company with merchandises like Crops, Livestock, Food, Health, Electricity and Gas. The concern between Cargill and U.S was started in 1963 to provide grains but First office of Cargill was started in 1991 and has got important experience of aid with Russia. They are located in Efremov, Rostov and Krasnodar. The entire figure of Cargill employees in Russia is more than 1,700 which makes it one of biggest foreign investing spouses in Soviet Union. The entire investing of Cargill in Russia was near about $ 650 million for the development of Russia ‘s agribusiness and nutrient industry. ( Anonymous, 2009a )

FDI from Russia to U.S

Presently U.S.A is importing about $ 19.8 billion merchandises from Russia and the most common merchandises are Oil & A ; crude oil merchandises which cover about 50 % of U.S import from Russia, Aluminum, Semi-finished steel merchandises, Nuclear fuels and many more. The major Russian companies that have FDI in U.S are Sovereign groups and Smirnoff vodka which is and one of the most common trade names used every where in U.S. SmirnoffA is a trade name ofA vodkaA which owned and produced by theA BritishA companyA Diageo and was established in 1831 in Moscow. Now yearss Smirnoff is the largest selling trade name of vodka in United States. The major workss of Smirnoff include the Plainfield works that produces Smirnoff vodka, Smirnoff turn and many more the existent size of this works is around 350,000 square pess and it is one of the biggest and best of all time fastest combined liquors and malt drink workss in the universe. ( Anonymous, 2008 )

Trading Blocs

Russia is a portion of many merchandising axis from which some of them are related to about every state in the universe. Some most common trading axis in Russia are APEC ( Asia Pacific Economic Corporation ) , CWIS ( Common Wealth of Independent State ) , SEZ ( Single Economic Zone ) and many more. Out of these axiss SEZ is the latest zone that was signed among Russia, Byelorussia, Kazakhstan and Ukraine on September, 2003 in Yalta ( Anonymous, 2005 ) . The chief ground for subscribing this understanding is to seek a new optimum manner of economic integrating. The Single Economic Zone means is closely similar to NAFTA which was signed in 1992 among U.S, Mexico and Canada. The thought for doing this axis is to make an incorporate imposts zone among members to guarantee free motion of all factors of production like goods, services, hard currency, and labour force with individual trade policy including fiscal policies and foreign exchange policies. At present, there is a high degree of working organic structure is running SEZ which include Deputy Prime Ministers of member states and there chief undertaking is to take all usage, duty ordinance and non-tariff ordinance to make for the free flow of hard currency and labour forces. ( Malashevskaya, 2005 )


A diverseness of attacks is used by political scientists to analyse these foreign economic policies. In order to do Russian trade policy work for the development of the state it is necessary to diversify the cosmopolitan fight of the Russian economic system. My suggestion is to take all likely steps to acquire rid of assorted boundaries to Russia ‘s exports to the international markets.


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